1. Pemberton’s Dilemma

2. Introduction:
This exercise creates a situation in which you and the others will be making separate decisions about how to manage your firm. The outcomes (profits and losses) are determined not only by what you do, but also by a number of other factors such as the goals and motives that you and the other party have and the communication that takes place between you and them.

3. Procedure:
Divide your groups into two management teams (Country Market & Corner Store)
Prepare sheets of paper for each management team: one ½ crosswise (tally sheet) and two ¼ sheets (decision cards)
Represent your store in discussions with the other store about the decision to operate (or not) during Sundays

4. Procedure:
There will be 12 one-minute rounds where stores will simultaneously decide whether they will open or not
You execute your decision by revealing to the other team the appropriate card (“open” or “closed”) at the same time that the other team is revealing their card to you.

5. Procedure:
Each round represents one Sunday; every 4th Sunday is part of a long weekend
A two-minute confidential planning session separates each Sunday
The two teams may, if they so desire, negotiate with each other for 3 minutes IMMEDIATELY FOLLOWING WEEKS 4 AND 8 ONLY.

6. Relevant Information:
Commercial activity in Pemberton has been prohibited during Sundays
Sunday shopping has been permitted in the metropolitan center just 30 minutes away
Both Country Market and Corner Store have been consistently losing potential profit as Sunday shopping becomes more popular

7. Relevant Information:
If both stores remain closed on a Sunday, each will have the usual $20,000 weekly profit
If only one store opens on a Sunday, it will earn a $40,000 profit for that week while the other store will incur a $40,000 loss
If both stores decide to open on a Sunday, each will incur a $20,000 loss for that week

8. Building Your Team Strategy
After reading the instructions/relevant information, answer 2 questions with your team:
What are your objectives for this game? (what for)
What are the moves that you will make to meet these objectives? (how)

9. Pay-off Chart: Country Market Close Corner Store Open CS: +$20,000
CM: +$20,000
CS: -$40,000
CM: +$40,000
CS: +$40,000
CM: -$40,000
CS: -$20,000
CM: -$20,000
Country Market
Corner Store
Close
Open

10. Sample Tally Sheet: Round Decision Profit/Loss (Sunday) CS CM 1 Open
Close
+$40,000
-$40,000 2 3
-$20,000 4
+$20,000

11. Debrief: Review the outcomes from summary table- what do we see?
a/Both high and positive scores-usually a strong cooperative pair
b/Both moderate scores-often a group that learned to cooperate
c/ Both low scores-usually a competitive pair
d/ Groups with large difference between scores-one group took advantage of the other

12. Dilemma Characteristics:
Individual choices reflected in joint outcomes
Interdependence affects outcomes: Payoff to self is the only reward (lack of concern for the other)
Mutual Adjustment: Influence on negotiating partner- change over time
Value Claiming and Value Creating: which is the more prominent goal
Lack of Direct communication, ability to make binding agreements, trust

13. Can the Dilemma be avoided?
Lengthen the shadow of the future (repeated rounds)
Use Sophisticated Strategies
Use knowledge of the other- probability of the other’s move OR

14. Can the Dilemma be avoided?
Interdependent: When the parties depend on each other to achieve their own preferred outcome they are interdependent; they are characterized by interlocking goals.
Recognize that negotiation is a process that transforms over time, and mutual adjustment is one of the key causes of the changes that occur during a negotiation- Revenge
Realize successful coordination of interdependence has the potential to lead to synergy, which is the notion that “the whole is greater than the sum of its parts.” In effect we can increase the size of the pie.
Manage conflict whether it is inter-group, intra-group, interpersonal, or intrapersonal

15. Overview Viewed as a fixed pie situation: we lose-they gain
Non verbal communication:
Choices based on previous moves
Gestures
Emotion around losses – betrayal, revenge
Loss of focus on strategy and goals
Intra-group challenges
Agreeing on goal strategies
Backing representatives

16. Negotiators Dilemma: Negotiator B Negotiator A Both + A - B ++ A ++
Cooperative
Competitive

17. Negotiator’s Dilemma
How to cooperate and create value at the table without being taken advantage of or becoming hostage to the relationship
How to compete or claim value at the table without damaging the relationship or blocking the negotiation
How to maximize value while minimizing risk

18. The End
The End

19. Prisoner Dilemma
Two men suspected of committing a crime are arrested by the police and placed in separate cells. Each is told that he may either confess to the crime or remain silent. Each is told that if he confesses and his partner does not, the one who confesses turns state's evidence against the other and goes free while the other will go the jail for a long time (e.g., 10 years); if both confess, they both go to jail for a moderate term (e.g. 5 years); but, if neither confesses, then the police will have them found guilty of a lesser charge - - carrying concealed weapons - - and sent to jail for 1 year.

20. PrisonerDilemma: Prisoner 2 Silent Prisoner 1 Confess P1-1 Year
P years
P2- Free
P1- Free
P2 – 10 Years
P2: - 5 Years
P1: - 5 Years
Prisoner 2
Prisoner 1
Silent
Confess